The opinion of the court was delivered by: CARTER
Plaintiff Reaemco, Inc. seeks treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15, for defendants' alleged violations of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. Reaemco also alleges violations of the Interstate Commerce Act, 49 U.S.C. § 5, and seeks damages thereunder, 49 U.S.C. § 8.
Pursuant to Rule 12(b)(6), F.R.Civ.P., all defendants have moved to dismiss the complaint for failure to state a claim upon which relief can be granted.
Defendants assert three main grounds for dismissal: plaintiff lacks standing to assert antitrust claims; the charges based on defendants' alleged actions to influence government action fail to state a claim under the antitrust laws; and the collateral estoppel or res judicata effect of prior proceedings. In addition, defendants assert that the Interstate Commerce Act claim is not viable and is barred by the applicable statute of limitations.
This case arises out of the failures of four related companies (hereinafter referred to collectively as "REA"): REA Holding Company, the Express Company, Inc., REA Express, Inc. (formerly known as Railway Express Agency, Inc.), and Rexco Supply Corporation. On February 18, 1975, these companies filed a petition for an arrangement under Chapter XI of the former Bankruptcy Act, 52 Stat. 905 et seq. (1938) (repealed by Bankruptcy Reform Act of 1978, Pub.L. 95-598, Title I, § 101, 92 Stat. 2549 (1978)), and were permitted by the Bankruptcy Court, Galgay, J., to continue to operate as debtors-in-possession. In April, 1975, a creditors' committee which included defendants Allegheny Airlines, American Airlines, Delta Airlines, Eastern Airlines, Northwest Airlines, Trans World Airlines (hereinafter referred to collectively as the "airline defendants"), and Penn Central Railroad, was elected pursuant to section 338 of the former Bankruptcy Act. Defendant Burlington Northern, although not itself elected to the creditors' committee, was a creditor and allegedly nominated and voted for the seven defendants that were so elected.
In November, 1975, REA requested that it be adjudicated bankrupt; that request was granted by Judge Galgay on November 5, 1975. C. Orvis Sowerwine, an officer of defendant Shearson Hayden Stone Inc., was qualified as trustee, and the creditors' committee was dissolved. The trustee promptly proceeded to liquidate the bankrupts' operating facilities, so that the only substantial assets remaining were customer lists, trade names, trademarks and various "operating authorities" obtained through the Interstate Commerce Commission (ICC) and the Civil Aeronautics Board (CAB), necessary to the operation of their former business. See In re REA Holding Corp. (Manning v. Sowerwine), 558 F.2d 1127, 1128-29 (2d Cir. 1977) ("Manning ").
One of the operating authorities formerly used by the bankrupt companies had already been lost. In 1975, the CAB ordered termination of REA's "air express" authority, Express Service Investigation, Docket No. 22388 (CAB April 9, 1975 and May 23, 1975), finding that continued air express service "was no longer in the public interest." REA Express, Inc. v. C.A.B., 524 F.2d 54, 59 (2d Cir. 1975), cert. denied, 426 U.S. 906, 96 S. Ct. 2227, 48 L. Ed. 2d 831 (1976). That order was affirmed by the Court of Appeals. Ibid.
Reaemco was incorporated in Delaware on April 30, 1976, "for the specific purpose of succeeding, as a common carrier, to the business and operating rights" of REA. Complaint P 2(a). It was "organized in the interest of REA's employees who desired to continue to operate REA," Manning, supra, 558 F.2d at 1129, and 52% of its stock is held through a trust for the benefit of former REA employees. The complaint does not indicate that Reaemco ever engaged in any activities other than its attempts to purchase the remnants of REA, or that it had any facilities or ability to do so.
Between June 23, and July 9, 1976, Judge Galgay conducted six days of hearings to consider various proposals to purchase REA's remaining assets. The principal bidders were Reaemco and a company called Alltrans. On July 26, 1976, Judge Galgay directed the trustee to accept Alltrans' bid and reject Reaemco's. In re REA Express, Inc., 75 B 253 (S.D.N.Y.). Reaemco's appeal from that order was denied. In re REA Holding Corp., 447 F. Supp. 167 (S.D.N.Y.1978) (Werker, J.). Plaintiff alleges that Alltrans' proposed purchase subsequently was rejected by the ICC (Complaint P 8(f)), possibly in reference to the ICC's revocation of certain of REA's temporary operating authorities in late 1976. See REA Express, Inc. v. United States, 568 F.2d 940 (2d Cir. 1977), cert. denied, 435 U.S. 923, 98 S. Ct. 1485, 55 L. Ed. 2d 516 (1978).
After Judge Galgay rejected Reaemco's proposal, ten former REA employees, as creditors, filed a petition for reorganization under Chapter X of the former Bankruptcy Act, 52 Stat. 883 et seq. (1938). Judge Galgay rejected the petition on September 28, 1976, In re REA Express, Inc., 75 B 253 (S.D.N.Y.), and his report was adopted on appeal, In re REA Holding Corp., 75 B 251 (S.D.N.Y. September 30, 1976) (MacMahon, J.), and subsequently affirmed by the Court of Appeals. Manning, supra, 558 F.2d 1127.
Reaemco, painting with a broad brush, alleges a wide-ranging "unofficial agreement" among defendants amounting to a conspiracy in restraint of trade and an attempt to monopolize. The purported objects of this agreement were the final ruin of REA, its total elimination as a competitor in the express business, and the prevention of Reaemco from ever becoming a viable competitor in that area. The alleged motivation for Penn Central, Burlington Northern and the airline defendants was the desire to keep competition with their own express business operations at a minimum level. Shearson is alleged to have had several independent objectives: to assist its railroad and airline clients to minimize competition, to avert a substantial loss of business it might suffer if REA was successful in its law suits against various of its airline and railroad clients, and to control funds realized on REA's liquidation, which would have been unavailable in the event of a successful reorganization.
Defendants' alleged actions to effect these ends the alleged offenses and the injuries purportedly resulting therefrom fall into several general categories. The largest group consists of acts apparently directed at REA: defendants are accused of (1) preventing REA from being reorganized under Chapter X (Complaint PP 8(a), (f); (2) operating REA through Sowerwine and the creditors' committee so as to cause it further loss of assets and value (Complaint PP 8(b), (e), (i)); (3) thwarting the prosecution of REA's lawsuits against various airlines and railroads, and refusing to allow Reaemco to pursue them on REA's behalf (Complaint P 8(c)); (4) using their monopoly power to control the terms on which vital services were provided to REA (Complaint P 8(g)(i)); (5) filing false and excessive claims against REA in bankruptcy (Complaint P 8(g)(ii)); and (6) engaging in improper activities "with respect to" the CAB to cause REA to lose its air express authority (Complaint P 8(g)(iii)). Some of this conduct is claimed to have been undertaken in order to frustrate Reaemco's efforts to succeed to REA's business, but none is alleged to have been directed principally at Reaemco itself.
A second category alleges actions that were taken more or less directly against Reaemco. The complaint accuses defendants of (1) acting to render Reaemco's plan infeasible by campaigning to prevent Reaemco from obtaining the federal loans needed to effectuate it (Complaint P 8(d)); (2) approving the aborted sale to Alltrans, knowing it would not be consummated, to block Reaemco's attempted purchase (Complaint P 8(f)); and (3) harassing Reaemco by the use of administrative and judicial proceedings to foreclose Reaemco from access to such proceedings (Complaint P 8(h)). Reaemco asserts that, as a result of defendants' conduct, it was injured by its inability to succeed to REA's business and operating authorities (Complaint P 9). Actual damages are claimed in the amount of $ 55 million.
In addition to the injuries to REA and Reaemco said to flow from defendants' activities, a third class of injuries is claimed: defendants, by destroying REA and preventing Reaemco from succeeding to its business, allegedly caused REA's former employees to suffer losses, and Reaemco claims to be the ...